Opportunities outweigh risks in China, says Eli Lilly

Lilly is investing up to $70m in expanding its China JV

Eli Lilly says the opportunities in China outweigh any perceived challenges as it begins a $70m expansion of its manufacturing joint venture.

Lilly entered into a joint venture with Nantong, Jiangsu Province-based company Novast Laboratories in 2012 in order to create produce Lilly-branded generic drugs for the local market.

Recently, the firm began work on 260,000 sq ft of new manufacturing and development space in a $60-70m (€43-50m) expansion and - Lilly spokesman Andrew McLaughlin told in-Pharmatechnologist.com - will both broaden the firms’ mutual portfolios in China and produce and supply the Chinese market with branded generics meet high global quality standards in a cost-effective manner.”

The plant is set to open in 2015 and will create additional 2.2bn units of solid oral dosage drugs annually.

Chinese Challenges

However, the Chinese market has been turbulent for a number of Western firms with last year bribery scandals affected a number of large multinationals – including GSK, Novartis and AstraZeneca - and Actavis recently announced plans to leave the region by selling its stake in its Chinese subsidiary.

“There are many challenges for multinationals working in the various emerging markets, but we believe the opportunities outweigh any perceived challenges, especially in China,” McLaughlin told us.

“Lilly continues to make strategic investments in the country, which now represents the world’s second-largest pharmaceutical market.”

Furthermore, a number of other Big Pharma companies have continued to show interest in China. In the last six months, there have been investments from Boehringer Ingelheim, Merck Serono and Bayer, who earlier this month acquired the Chinese OTC firm Dihon in order to grow its presence in the country.

However, China is “not a business friendly environment” Actavis CEO Paul Bisaro told delegates at the JP Morgan Conference in January, just days before pulling out of the country.

He said: “If we’re going to allocate capital, we’re going to do so where we can get the most amount of return for the least amount of risk. And China is just too risky.”

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